Bitcoin Crosses $61K as Traders Remain Cautious Ahead of U.S. CPI, Further Unwinding of Yen Carry Trade

Bitcoin (BTC) surged above $61,000 in early Asian trading hours Wednesday to lead gains among major tokens, reversing losses from a steep price drop earlier this month.

Bitcoin added over 3%, CoinGecko data shows, with majors ether (ETH), Solana’s SOL, Cardano’s ADA, xrp (XRP) and BNB Chain’s BNB rising as much as 2.8%. Major memecoins dogecoin (DOGE) and shiba inu (SHIB) rose just 1%, suggesting sentiment wasn’t in favor of riskier bets.

Gains in bitcoin beat the 2.45% rise in the broader CoinDesk 20 (CD20), a liquid index tracking the largest tokens by market capitalization, minus stablecoins.

Despite the modest gains, some trading funds remain cautious amid a busy data week, warning of possible short-term tremors that could impede the ongoing rally.

“Investors remain cautious ahead of US CPI this week,” crypto trading firm QCP Capital said in a Telegram broadcast. “They will closely watch inflation numbers for guidance on whether the Fed will cut rates by 50 or 25 bps in September. The odds are now evenly split.”

Wednesday’s recovery helped chalk up gains for traders nursing losses after a 20% market-wide drop earlier in August as the popular yen carry trade unwinded. And some strategists warn of further losses related to the carry trade, stating its impact is not entirely over.

In a CNBC interview earlier this week, Richard Kelly, head of global strategy at TD Securities, said he is “very hesitant” to declare the end of the carry trade unwind.

“I’d push back on a lot of those narratives. You don’t have any real data to price your carry trades that we know,” Kelly said in the CNBC interview. “I think there is still a lot that can unwind, especially if you look at how undervalued yen is.’

“That is going to change the valuations for the next one to two years to come. That’s going to have spillover effects,” he added.

The Bank of Japan (BoJ) recently raised rates for the first time in over a decade, destabilizing global markets and risk assets, including bitcoin. When rates were low, traders borrowed yen for cheap to invest in another asset that provided a higher rate of return – creating the carry trade.

A bump in rates impacted the profitability of trading strategies, creating a ripple effect that impacted nearly all markets. BTC fell 15% in a 24-hour period, one of its largest drops in recent years, while major tokens slid at 22%.

Earlier in August, the deputy governor of the BOJ said that the central bank would avoid raising rates amid unstable markets, impacting yen carry trades and risk assets.

A former BOJ official has since said the central bank would defer additional interest rate hikes to next year, suggesting a preference for market stability over the near term.

Aside from bitcoin, traders continue to be bullish about TON.

Toncoin’s TON rose 7% during the Wednesday Asia trading session, according to CoinDesk Indices data. Stakeholders in the Toncoin ecosystem point to the growth of GameFi on the platform, as well as its close integration with Telegram as reasons for the token’s continued growth.

“The number of players of TON games break the ceiling glass of previous blockchain games by the viral social growth in Telegram. And some TON games have already verified the significant revenue from game play itself, not token selling,” John Cheang, the TON Foundation’s Asia-Pacific lead said in an email interview, while also pointing to TON’s record-high blockchain transactions per seconds as a reason why it can scale.

Ben El-Baz, Managing Director of HashKey Global, which is an investor in TON-ecosystem projects like Catizen, added in an email comment that leveraging Telegram’s advantage will “attract more developers represents a significant opportunity for TON.”